Reasons to Choose a VA Loan for Home-ownershipMay 27th, 2021 by Administrator
The VA loan program in the United States is a mortgage option for the nation’s veterans and their families so that they can fulfill their dream of home-ownership. A VA loan is issued by private lenders and is backed by the Department of Veterans Affairs (VA) of the United States. It works a bit differently than a conventional loan product and offers many advantages to borrowers. Eligible veterans and their families can get this loan to purchase a property or refinance an existing mortgage. Here’s a list of eligible people who can apply for a VA loan:
- Veterans who have served in Army, Navy, Air Force, Coast Guard, or Marine Corps
- Reserve Members
- Active-Duty Personnel
- National Guard Members
- Some Surviving Spouses
A VA loan offers a great opportunity to veterans so that they can purchase their dream homes. It has the following benefits so that they feel fewer burdens financially:
Zero Down Payment
A VA loan is backed or guaranteed by the U.S. Department of Veterans Affairs and federally insured. Borrowers don’t need to pay any down payment, which gives them an edge over other conventional loan products. It provides greater financial stability to people who are unable to arrange down payments for loans.
No Mortgage Insurance
As there is no requirement for a down payment, there would be no mortgage insurance added to the home loan. It is a monthly fee that is added to any mortgage that has a down payment of less than 20%. With VA loans, there will no private mortgage insurance which allows borrowers to use their homes as a financial asset as soon as possible.
Lower Mortgage Rate
The mortgage rate on a VA loan is usually 0.5 to 1% lower than conventional mortgage rates. It keeps the overall interest amount on the lower side so that you can easily repay your loans in time.
No Limit to Mortgage Amount
It is also a key advantage of getting a VA loan over a conventional mortgage. Eligible veterans can borrow as much mortgage amount as a private lender can give them without a down payment. With no down payment on the total mortgage amount, it is a huge benefit for people who want to purchase a bigger property of a higher value.
No Prepayment Penalty
You can make prepayment whenever you want to reduce your overall interest amount without any fear of penalty. Many VA loan programs even allow borrowers to structure their repayments to deduct a little extra amount each month to save a big amount over the mortgage period.
In addition to these benefits, VA loans have certain limitations too as they are issued for a certain type of homes for primary residences only. If you are a US veteran, you can easily apply for a VA loan for homeownership. Many professional real estate agents can help you understand the VA loan programs, eligibility criteria, and how much you can borrow from a private lender to purchase your dream home.